Ranbaxy goes back to its Japanese roots

New Delhi, June 11 Ranbaxy is back in the Japanese fold — that is where it started from 71 years ago.

The company’s original promoter, Gurbax Singh, was employed with Japanese pharmaceutical company A. Shiniogi, manufacturers of vitamins and anti-TB drugs, when he, with Ranjit Singh, decided to launch a pharma distribution firm of their own — Ranbaxy — and found the same Japanese company willing to appoint them as their Indian distributors. Now, seven decades and three generations later, when the company is among the world’s top ten, it will rekindle its Japanese connection.

Though the company’s name was culled from the merging of the two original promoters’ names, in the 1950s they had to give up the venture. They offered the company on a platter to local moneylender, Bhai Mohan Singh, with whom they had built up large debts. From then on for Ranbaxy there was no looking back. Its collaboration with Italian pharma company Lapetit Spa (Milan) and subsequent buyout of the company brought it into the mainstream of the business. In 1973, Ranbaxy Laboratories Ltd went public, with the next three decades turning it into a power to reckon with.

It was in 1962, at a time when the domestic market was dominated by foreign drug makers, that Ranbaxy got into drug production. Bhai Mohan Singh put his eldest son, Dr Parvinder Singh, in the forefront in 1967 and the latter rose to become the company’s Managing Director in 1982. Dr Singh, a PhD in chemistry from University of Michigan, used his academic background and astute business sense to catapult the company into the global pharmaceutical scenario. However, Bhai Mohan Singh remained in command.

Generic versions

What also changed the fortunes of the company was a legislation in 1970 that effectively ended patent protection and domestic manufacturers were now able to produce low-cost, generic versions of popular, yet expensive drugs. Ranbaxy leveraged on this and the country’s highly trained, inexpensive workforce.

Its first success story was the launch of Calmpose in 1969, a generic formulation of the popular Roche discovery, Valium. Calmpose not only put Ranbaxy on India’s pharmaceutical map, but it helped the company speed up expansion. By 1973, it opened a factory in Mohali for producing active pharmaceutical ingredients and expanded its range of generic medications and ingredients. By the 1980s it completed a new API plant in Toansa, in Punjab, which subsequently received Food and Drug Administration (FDA) approval. As part of its new strategy, it launched its own research and development centre and accelerated its marketing efforts with a dedicated marketing subsidiary, Stancare.

As the company grew from strength to strength, Bhai Mohan Singh also inducted his other two sons, Mr Manjit Singh and Mr Analjit Singh, into it. However, their stints were short lived. In 1989, the patriarch decided a three-way split of his assets. Dr Singh was given control of Ranbaxy, Mr Manjit Singh was made in charge of Montari Industries and Mr Anajit Singh was handed over Max India.

On the Ranbaxy front, business continued to be at its peak. By 1990, the company had a new product to sell, when Ranbaxy was granted a US patent for its doxycycline antibiotic preparation and the following year for its cephalosporin preparations. Its global ambitions included a joint venture in Nigeria, through which it opened a production facility in Lagos.

1992 milestone

A major milestone for the company came in 1992, when it reached a marketing agreement with Eli Lilly & Co. The companies set up a joint venture to manufacture and market Lilly’s pharmaceuticals for the domestic market. At the same time, Lilly agreed to begin marketing Ranbaxy’s generic medications in the US, hence giving the latter large-scale access to the world’s single largest drugs market.

In February 1993, differences between the family patriarch and Dr Singh over the expansion and professionalisation strategy of Ranbaxy led to Bhai Mohan Singh and another four board members stepping down. The same day Dr Singh took over as Chairman and Managing Director of the company, while Bhai Mohan Singh was made Chairman Emeritus. While the board room battle got over, relationship between father and son continued to be tumultuous and the patriarch took his son to court on charges of reneging on commitments made in the family settlement to give money for his charities.

The demise of Dr Singh in 1999 saw Bhai Mohan Singh make a last ditch effort to regain control of the company, pitching for family to be included in the board. Though the control of the company passed on to Dr Singh’s heir apparent, Mr D.S. Brar, and subsequently Mr Brian Tempest for several years, in 2006 the patriarch finally had his wishes fulfilled. Just before Bhai Mohan Singh died, his elder grandson, Mr Malvinder Mohan Singh, took control of the company by becoming Managing Director and CEO, while his younger grandson, Mr Shivinder Mohan Singh, was inducted to the company’s board.

Ups and downs

The next few years Ranbaxy expanded its operations by copying blockbuster drugs such as Merck & Co’s Zocor cholesterol treatment drug and selling them for a fraction of the price in countries including France, Germany and the US. It also went in for big ticket overseas acquisitions, including Romania’s Terapia SA. However, in the same period the company saw several patent litigations draining its financial muscle, including Ranbaxy’s attempts to win the right to sell a version of Pfizer Inc’s best-selling Lipitor treatment before the patent expires in 2010. Analysts cite the litigation pressure as one of the reasons for the eventual sell-out by the promoters. It, however, remains to be seen how the company’s fortunes will pan out under the new Japanese dispensation.

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